Thursday, March 20, 2014

Analysis: Oakland Tenants Did Well in Deal with Landlords

By Jean Tepperman
Thu, Mar 20, 2014 at 10:22 AM

Oakland tenant organizations and their supporters are claiming a victory this week after the City Council voted Tuesday night to approve what Robbie Clark of Causa Justa/Just Cause called “the first solid tenants’ rights legislation in over ten years.” Tenant advocates had been campaigning to close two major loopholes in the city’s rent control law — loopholes that allow landlords to increase rents to pay them back for money they spent on capital improvements and repayment of debts. Because of that loophole, some tenants have been faced with huge rent increases, sometimes more than 100 percent.

The city’s Rent Adjustment Board had proposed changes that met some of the tenants’ demands, but the final package approved unanimously in the March 18 council meeting went farther. The most important change, Clark said, was to limit all rent increases, including charges for capital improvements, to 10 percent a year, and not more than 30 percent over five years. The East Bay Rental Housing Association, a landlords’ group, had opposed the 10 percent cap, while the Oakland Jobs and Housing Coalition, representing large landlords, expressed ambivalence.

Both landlord organizations, however, strongly opposed another tenant demand which was included in the City Council package: a requirement that landlords seeking to pass the cost of capital improvements through to their tenants get permission beforehand from the Rent Adjustment Board.

Dan Kalb
  • Dan Kalb
Building owners also had fought a tenant demand that they share the cost of capital improvements and not force tenants to shoulder all of the costs. Councilmember Dan Kalb, who submitted his own proposal echoing many of the tenants’ demands, pointed out that landlords also benefit from improvements through increased property values and tax breaks. The Rent Adjustment Board proposals would have not have changed Oakland’s current unique policy of allowing landlords to pass the whole cost of capital improvements on to the tenants. Tenants and their allies, however, continued to lobby council members, and the final policy allowed landlords to pass only 70 percent of capital improvement costs to their tenants. That was more than the 30 to 50 percent tenants wanted, but acknowledged the principle that tenants should not have to bear the whole burden of paying for improvements.

The proposal approved by the city council also included another tenant demand that was not part of the Rent Adjustment Board’s plan: It instructed staff to write a clear definition of “capital improvement,” to prevent what tenants said was a widespread practice of using the capital improvement loophole to charge tenants extra for routine maintenance.

Finally, the council eliminated the ability of building owners to add rent increases to pay themselves back for expenditures on debt service — paying back the principal and interest on loans.

To become final, the changes must be ratified by the council a second time, but the unanimous approval of the measures this week makes that final step extremely likely.

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